Madda Walabu University College of Business and Economics Department of Accounting &Finance

CHAPTER 2
MATRIX ALGEBRA AND ITS APPLICATION
2.1. Definition of Matrix Algebra

A matrix is a rectangular array of numbers. Matrices are enclosed in grouping symbols such
as brackets or parenthesis.

 The numbers with in the matrix are called components, entries or elements.

Example:

Matrices are represented by capital letters such as, A, B, C … while entries are respectively,
represented by aij, bij, cij… The subscript i and j on an entry correspond respectively to the
row and column in which the entry is located in the matrix. It is important to note that the
row is always given first. Thus a 42 represents the entry in the fourth row and second column;
and entry a21 represent the entry located in the second row and first column. For instance, in
matrix A above 3 is situated in the first row and second column, where as 9 is located at
second row and third column.

Generally, a matrix having m rows and n columns can be written as follows;

A=

Matrices are classified by the number of rows (horizontal) and columns (vertical) they have.
A matrix having m rows and n columns is said to have size or dimension of m by n, and is
written as m x n.

Example: A = is of size 2 by 3.

B= is of size 3 by 2.

C= (2 7 9 -5) is of size 1 by 4

D= (5) is of size 1 by 1.

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Madda Walabu University College of Business and Economics Department of Accounting & Finance

2.2. Types of Matrices

2.2.1. Square matrix: A matrix having the same number of rows and columns are square
matrix.
Example: A = is a 3 by 3 square matrix. The entries on the

main diagonal of the matrix are: a11 = 4, a22= 8 and a33 =9

2.2.2. Vectors: Are matrix either row matrix or column matrix. It is an Mx1 or 1xn matrix

 Column matrix is a matrix with only one column

Example: A and B are column matrices of size 3x1 and 4x1

respectively,

 Row matrix is a matrix with only one row

Example: (2 3 -5) and (1 0 1 7) are row matrices of size 1x3 and 1x4, respectively.

2.2.3. A Zero matrix: is a matrix in which every entry of the matrix is zero

Example: A =

2.2.4. Identity (unit) matrix: Is a square matrix with all its elements along the main
diagonal (that extends from the upper left to the lower right) is one (unit) and zero in
all other positions.

Example: C =

N.B: Each identify matrix is a square matrix. Ax I = A & I x A = A. That is, the product of
any given square matrix & identity matrix is the matrix itself.

2.2.5. Diagonal matrix- a square matrix where elements on the primary diagonal are

consecutive and others zeros.

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 Madda Walabu University College of Business and Economics Department of Accounting &Finance

2.2.6. Scalar Matrix- is a square matrix where elements on the primary diagonal are the same

and the rest zeros.

Example: A=

2.2.7. Transpose of a matrix

If we interchange the rows and the columns of an mxn matrix A, we get new nxm matrix;
which is the transpose of matrix A. it is normally denoted by A’.

Example: A= A’=

N.B: Two matrices A, and B are said to be equal if and only if they have same size and
each entry in matrix A equals the corresponding entry in matrix B, that is a ij = bij for all
ij.

2.2.8. Equal Matrices-Two matrices A & B, are said to be equal only if they are of the same

dimensions and if each element in A is identical to its corresponding element in B; that is, if

and only if aij = bij for every pair of subscripts i and j. If A = B, then B = A; or if A≠B, then

B ≠A.

1 2 1 2
A  
is equal to B = B  

3 4  3 4
   

1 2 4 2
   
However; A    is not equal to C = C  
3 4 3 1
   

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Madda Walabu University College of Business and Economics Department of Accounting & Finance

Even though they contain the same set of numerical values, A and C are not equal because

their corresponding elements are not equal; that is, a11 ≠ C11 and so on.

2.3. Matrix Operation

2.3.7. Addition of matrices

If matrix A and B have the same order, and their elements are aij and bij respectively, Then
A+ B is a matrix C whose elements are, aij+ bij = cij for all i & j. However, if the order of
matrix A and matrix B is different it is impossible to add and i.e. addition are not defined
for matrices with different size.

Example:

Law of matrix addition

Because we add two matrices by adding their corresponding entries, it follows from the
properties of real numbers, if A, B and C are matrices of same size then,

A+ B= B+A Commutative property

A+ (B+C) = (A+B) + C Associative property

If A and B are matrices of the same size, using the scalar multiplication we can define the
subtraction A - B by A – B = A + (-B)

Example:

Note the following points

The subtraction of matrices can also be obtained by subtracting corresponding entries of

A and B.

For matrix addition and subtraction to be conformable, the matrices must have same
dimension.

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2.3.8. Matrix multiplication

a) Product of a number and a matrix: A matrix can be multiplied by a constant. By
multiplying each component in the matrix by a constant, the result is new matrix of the
same dimension as the original matrix.
The product of a number k and a matrix A, called scalar multiplication and denoted by KA
is a matrix formed by multiplying each entry of A by the number K.

- If K is any real number and A is an M x N matrix, then the product of KA= KA = kaij

Example: If A= (6 5 7), then 2x = (2x6) (2x5) (2x7)

2x = (12 10 14) and if

Identity and inverse property

Using letter 0 to denote the zero matrix, it is clear that the matrix 0 behaves like the number
0 in ordinary arithmetic. So if matrix A and matrix 0, have the same size (dimension) then,

A+ 0 = A Identity property

A+ (-A) = 0 Inverse property

Application Example:

Operating from two plants a manufacturer produces two products: Product x and product y.
Matrix A, B and C, below summarize the production from the two plants for the first week,
second week and third week, respectively. In each matrix row 1 represents the number of
product x and row 2 represents the number of product y.

A=

If column 1 in each matrix represents production from plant 1 and column 2 represents
production from plant 2, answer the following questions.

i) If production of each item from each plant during the fourth week is twice of the
productions of the first week, write a matrix that describes the total productions for the last
four weeks periods.

ii) If the plant for the total production for the coming four weeks is, to increase total
production of each type of product from both the plants by 10% of the total production

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 Madda Walabu University College of Business and Economics Department of Accounting & Finance

during the last four weeks, write the matrix that represents the total production for the
coming four weeks.

Solution:
i) The production for the fourth week is twice of production of the first week.
Therefore, we can get production of the fourth week by multiplying production of
the first week by 2. Therefore, the amount produced in the fourth week is obtained
by multiplying matrix A by 2. However, the question is about the total production
of the entire four weeks. Then, total production is equal to production of the first
week plus production of the second week plus production of the third week plus
production of the forth week (which is 2A). Using scalar multiplication and addition
of matrices the total production for the last four weeks period is given by the matrix
T as follows;

T= A+B+C+2A

= 3A + B+C

T =3 =

ii) Total production of coming four weeks period is expected to increase by 10% of total
production of last four weeks; which is T + 10%T =T+ 0.1T=1.1T. Thus, the total production
matrix is represented by the scalar multiplication

1.1T= 1.1 =

b) Multiplication of matrices

Definition of matrix multiplication: Two matrices can be multiplied together only, if the
number of columns of the first matrix is equal to the number of rows of the second matrix. If
this requirement is met, the two matrices are said to be conformable for multiplication. If
it is conformable for multiplication, the result of the multiplied matrices will contain the
number of rows from the first matrix and the number of columns from the second matrix.
Moreover If A is an mxp matrix and B is a pxn matrix, then the product, matrix AB, is an

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Madda Walabu University College of Business and Economics Department of Accounting &Finance

mxn matrix whose entry in the i th row and jth column is obtained by the dot product of i th row
of matrix A and the jth column of matrix B.

A B
Dimension Dimension
mxp pxn

Must be the same

Dimension of AB is m x n
nnp p

Example:

Are the above two matrices conformable for multiplication? Yes, it is conformable. We need
to check whether the multiplication is defined for the above two matrices or not, before
starting the multiplication. Size of matrix A is a 2x2 matrix and that of B is a 2x3 matrix. So,
the number of columns of matrix A (2) is equal to the number of rows of matrix B (2). Thus,
we can find the product AB which is a 2x3 matrix.

AB=

Find BA =?

Dear student, you should also note that BA in matrix is not equal to AB. In another words,
commutative property does not hold in general for matrix multiplication.

Example:

Both A and B are 2x2 matrices, so both AB and BA are defined.

AB and BA are the same size matrices, but they are not equal; that is AB # BA. Thus, we
say that matrix multiplication is not commutative. But matrix multiplication has some of the

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Madda Walabu University College of Business and Economics Department of Accounting & Finance

same type of properties as multiplication of real numbers. If all products and sums are
defined for the indicated matrices A, B and C; and K is a real number then;

1. (AB) C = A (BC) Associative property

2. A (B + C) = AB + AC Left- hand distributive property

3. (B + C) A = BA + CA Right – hand distributive property

4. K (AB) = (KA)B = A(KB) Constant product property

Since matrix multiplication is not commutative, properties 2 and 3 must be listed as distinct
properties.

N.B: The product of a row vector and a column vector is a real number.

Example: Consider the product of the following two matrices,

Application Example:

A certain department store sales three different types of toys; Boat, Car, and Train. Suppose
there are 300 boats, 200 cars, and 100 trains in store 1 and 400 boats, 250 cars and 500 trains
in store 2. The value of each boat is Birr 40, each car is Birr 35 and each train is Birr 50.

i) Set up a matrix A where aij is the inventory in units of toy i in store j.

ii) Use matrix multiplication to determine the total value of inventory at each store

Solution:
i) In the required matrix A, toys should be represented by rows (toy i) and stores by columns
(store j)

A=

The 1st, 2nd and 3rd rows represent the inventory of boats, cars and trains respectively, where
as the 1st and 2nd column represent store 1 and 2 respectively.

ii) The total value of inventory is obtained by multiplying the number of each type of toy in
each store by the corresponding value of each toy and adding up the result. Thus, to apply
matrix multiplication the value matrix V is represented by a row matrix as,

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 Madda Walabu University College of Business and Economics Department of Accounting &Finance

Boat car train

V=

The total inventory value at store 1 and store 2 can be computed using matrix multiplication
AV as follows

VA =

Store 1 store 2

The total inventory value at store 1 is Birr 24,000 and at store 2 is Birr 49,750.

Self check Exercises

1. Let A =

Then find i) AB ii) BA iii) CB iv) BC

2. Let A = Find i) 3A-2B ii) 2AB iii) AB

3. A decision problem is a problem in which one must choose between several alternatives.
The following is an example of a decision problem. Ato Abebe wants to have kitfo for
his lunch and he has four places where he can eat his lunch. The first place charges Birr
11 for kitfo, Birr 3 for a beer and 60c for a coffee. The second place charges him birr 10
for kitfo, birr 4 for birr, and 80 cents for coffee. The third place charges Birr 10 for
Kitfo, Birr 3.50 for a beer and 75c for a coffee. The fourth place charges Birr 11 for
kitfo, Birr 2.75 for a beer and Birr 1 for a coffee. Express the above information in a 3x4
matrix. If Ato Abebe wishes to have a Kitfo, 2 beers and a coffee for his lunch, use
matrix multiplication to find the cost of lunch at each place. Assuming, that Ato Abebe
has no preference for any of the places; decide where he should eat to spend the least
amount of money.

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 Madda Walabu University College of Business and Economics Department of Accounting & Finance

4. A department store has two warehouses and three branch sales centers to be supplied.
The transportation costs per quintal from the warehouses to the branches are given in the
following table.

Branch 1 Branch 2 Branch 3

Warehouse A Birr 6 Birr 4 Birr3

Warehouse B Birr 2 Birr 3 Birr 8

Suppose if the number of quintals to be transported from warehouse A to branch 1, branch 2

and branch 3, are 16 quintals, 40 quintals, and 23 quintals respectively; and from warehouse
B to branch 1 and branch 2 are 20 quintals and , 35 quintals respectively,

i) Set up the column matrices A and B which shows the number of quintals
transported from each warehouse to the branches

ii) Use matrix multiplication to determine the total cost of transportation from each warehouse
to the branches.

2.4. Inverse of a Matrix

In matrix algebra, we have an analogous operation illustrated by

= = I, we say the second matrix is the multiplicative

inverse of A, and we write A-1 = thus A A-1 = I

Note: two square matrix are inverse of each other if their product is the identity matrix, I

If for a given square matrix A, another square matrix B of the same order is obtained such
that AB = BA = I, Then matrix B is called inverse of A and is denoted by B = A -1. Thus, AA-
1
= A-1A= I

Dear student, at this occasion you need to bear in mind some features of the inverse of
square matrix.

 If the inverse of square matrix is multiplied by the original matrix, the result is an
identity matrix.

 If the inverse of square matrix exists, it is unique.

 The inverse of the transpose of a matrix is the transpose of its inverse i.e., (A)-1 = (A-1)

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